Bitcoin Futures Open Interest Hits Record High on CME

Just last week, industry analysts were noticing an uptick in institutional interest in Bitcoin. This week, after the approval of a Bitcoin futures ETF, Wall Street traders are really getting in on the action.

Open interest in Bitcoin futures on the Chicago Mercantile Exchange (CME) now stands at $3.6 billion, higher than its previous record set in February. In contrast to other derivatives exchanges such as Binance and FTX, CME is the main source for U.S.-based institutional traders who want to bet on the future price of Bitcoin.

According to analytics site BYBT, CME is now responsible for just under 16% of all BTC futures open interest—behind Binance (24%) and FTX (17%)—in a market that now supports $23 billion in open interest. That number has swelled alongside the price of BTC; six months ago, it was closer to $2 billion.

In Bitcoin futures, people speculate on what the price of an asset will be at a later date. Buyers can make a bargain by locking in a lower price and then watching the asset shoot up in value; vice versa for sellers. Open interest indicates the dollar value of those contracts that haven't yet expired.

Last week, crypto analysts Arcane Research reported that money in Bitcoin options contracts—which function like futures but give parties the option of following through on the contract—was at its highest point since April 15. CME Bitcoin futures open interest stood at 17% of the global share. Both numbers were indicators that "bullish sentiment is brewing among institutional investors."

That assessment is looking more spot-on since, on Friday, the U.S. Securities and Exchange Commission allowed ProShares to move forward with a Bitcoin futures exchange-traded fund—the first such ETF the agency has permitted. The ETF, which lets people buy Bitcoin futures contracts as though they were stocks, begins trading tomorrow. And buzz around the product helped boost Bitcoin's price this weekend above $62,000, less than 5% off its record high of $64,804 in April. 

Open interest isn't the only indicator of growing bullishness among institutional investors. In a report today, crypto data firm Glassnode notes, "The favoured options contracts appear to be call options with strike prices above $100k... The open interest in call options dwarfs that in put options, aligning with the overall bullish market sentiment."

Call options allow someone to buy the asset; put options allow them to sell it. Right now, investors want to buy. Not only that, but they think the price will eventually reach $100,000.